Fleet Management to pay $10 million in Cosco Busan case

Fleet Management Ltd. was ordered to pay $10 million today for its role in causing the Cosco Busan oil discharge and a subsequent cover-up after the ship struck the San Francisco Bay Bridge in November 2007, the Justice Department announced.

Judge Susan Illston of the U.S. District Court in San Francisco, pursuant to the plea agreement, ordered $2 million of the total $10 million monetary assessment to be devoted to fund marine environmental projects in San Francisco Bay.

Fleet Management, a Hong Kong-based ship management firm, pleaded guilty to a criminal violation of the Oil Pollution Act of 1990 as well as felony obstruction of justice and false statement charges for creating false and forged documents after the crash at the direction of shore-based supervisors with an intent to deceive the U.S. Coast Guard.

Fleet Management was also ordered to implement a comprehensive compliance plan that would include heightened training and voyage planning for ships engaged in trade in the United States. The training will focus on better preparing masters for command of Fleet's vessels, providing classroom and shipboard navigation training to those who navigate Fleet's vessels, and ensuring that all Fleet vessels calling in U.S. ports create a thorough plan for how they will navigate in those ports. The new training and voyage planning requirements will be subject to auditing and the court's supervision.

"Fleet's systemic management failures played a significant role in causing the Cosco Busan disaster and they compounded the problem by attempting to cover-up their conduct," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department's Environment and Natural Resources Division. "The sentence today not only includes a significant monetary penalty but also will ensure that Fleet Management develops a culture that puts safety and the environment first."

"Fleet failed to meet its obligation under international law to ensure the crew was adequately trained on navigation procedures and equipment and then tried to cover it up," said U.S. Attorney Russoniello. "Today's sentencing should serve as a warning to everyone in the maritime industry - you will be held accountable for violations of federal and international laws."

"The U.S. Coast Guard is pleased to see an increased emphasis on crew training," said Rear Admiral Joseph Castillo, Commander of the 11th Coast Guard District. "The safety of mariners, the health of our economy, and the protection of our environment all require the safest possible operation of merchant ships sailing in our ports, waterways and coastal areas, and proper training is key to safe operations."

"Shipping companies that move goods through the San Francisco Bay must operate their vessels in a safe and legal manner. The Cosco Busan oil spill should not have occurred in the first place, and the company's attempt to cover-up its illegal acts only compounded the initial crime," said Nick Torres, Special Agent in Charge of EPA's Criminal Investigation Division in San Francisco. "The laws are there to protect our precious natural resources. Today's sentence sends a clear message that those who violate the law and pollute our waters will be vigorously prosecuted."

Fleet Management admitted "that it was a cause of a discharge of a harmful quantity of oil into the navigable waters of the United States, that it acted negligently, and that its negligence was a proximate cause of the discharge of oil into San Francisco Bay on Nov. 7, 2007."

In pleading guilty on Aug. 13, 2009, Fleet admitted that after the ship hit the Bay Bridge, it concealed ship records and created materially false, fictitious and forged documents with an intent to influence the Coast Guard's investigation. In particular, a false berth-to-berth passage plan for the day of the crash was created after the incident at the direction of shore-side supervisors known as superintendents and with the knowledge of the ship's master. Additionally, a ship officer falsified the ship's official navigational chart to show fixes that were not actually recorded during the voyage. Other records including false passage planning checklists were also created after the fact.

The collision caused a gash measuring approximately 150 feet long by 12 feet high on the port side of the ship, puncturing two of the ship's fuel tanks and damaging the fendering system on the Delta tower of the bridge, and resulting in a significant environmental clean-up. At least 2,000 migratory birds died, including Brown Pelicans, Marbled Murrelets and Western Grebes. The Brown Pelican is a federally endangered species and the Marbled Murrelet is a federally threatened species and an endangered species under California law.

The pilot of the Cosco Busan, Captain John Cota, pleaded guilty on March 6, 2009, and was later sentenced to 10 months in prison, one year of supervised release and 200 hours of community service for his role in causing the Cosco Busan collision and discharge of oil and deaths of migratory birds.

The criminal investigation was conducted by the Coast Guard Investigative Service; the EPA Criminal Investigation Division; the Federal Bureau of Investigation; the U.S. Fish and Wildlife Service; Silicon Valley Regional Computer Forensics Laboratory; and the California Department of Fish and Game, Office of Spill Prevention and Response. The investigation also received technical assistance from other Coast Guard offices including District 11 Legal Office, Sector San Francisco, Office of Investigations and Analysis, Office of Maritime and International Law, Office of Vessel Activities, Electronics Support Unit, Alameda and the Marine Safety Laboratory. In announcing the sentencing, the U.S. Attorney and Assistant Attorney General thanked federal and state investigators and offices for their assistance in the prosecution.

The criminal case was prosecuted by the U.S. Attorney's Office for the Northern District of California and the Justice Department's Environmental Crimes Section.